How to Review Your Homeowners Insurance Policy Before You Close

Most homebuyers receive their homeowners insurance policy a few days before closing. They glance at the declarations page, confirm the address looks right, and move on to the forty other things competing for their attention.

That is exactly how coverage gaps are born.

Your closing date creates urgency that works against you. There is no time to ask questions, no time to shop alternatives, and no time to understand what you are actually buying. Most buyers sign off on a policy they have never truly read — and do not discover what it does and does not cover until something goes wrong.

This guide walks you through exactly how to review your homeowners insurance policy before you close, what to look for on each page, and the questions to ask your agent while you still have time to make changes.

Start with the declarations page

The declarations page — sometimes called the "dec page" — is the summary at the front of your policy. It lists your coverage amounts, deductibles, premium, and any endorsements. Everything on this page matters.

Here is what to check:

Property address and description

Confirm the address is correct and the property description matches your home. Errors here can create problems at claim time.

Coverage A — dwelling

This is the amount your policy will pay to rebuild your home if it is destroyed. It should reflect the replacement cost of your home — what it would cost to rebuild it from the ground up at today's construction costs — not the purchase price, not the market value, and not the loan amount.

A common mistake is insuring to the loan amount. If your loan is $350,000 but it would cost $500,000 to rebuild your home, you are underinsured by $150,000.

Ask your agent: What replacement cost estimate was used to set this limit, and how was it calculated?

Coverage B — other structures

Covers detached garages, fences, sheds, and other structures not attached to the main dwelling. Typically set at 10% of Coverage A. If you have a large detached garage or significant outbuildings, verify this is sufficient.

Coverage C — personal property

Covers your belongings. Check whether this is set to replacement cost value (RCV) or actual cash value (ACV).

• Replacement cost value pays what it costs to replace the item today
• Actual cash value pays replacement cost minus depreciation — meaning a five-year-old laptop is worth far less than what you paid for it

If your policy pays ACV for personal property, ask about upgrading to RCV. The difference in premium is usually modest.

Coverage D — loss of use

Pays your additional living expenses — hotel, meals, storage — if your home is uninhabitable after a covered loss. Check the limit and time period. Some policies cap this at 12 months. A major loss can take significantly longer to repair.

Coverage E — personal liability

Protects you if someone is injured on your property and sues. Standard limits are $100,000 to $300,000. In a litigious environment where a single injury lawsuit can exceed those limits, consider whether you need more — either through a higher limit or an umbrella policy.

Coverage F — medical payments

Pays limited medical expenses for guests injured on your property regardless of fault. Usually $1,000 to $5,000. Not a major coverage but confirms the policy is a standard HO-3 form.

Your deductible

Your deductible is the amount you pay out of pocket before insurance kicks in. A higher deductible means a lower premium but more out-of-pocket exposure at claim time.

Look specifically for:

• All-peril deductible — applies to most losses
• Wind or hurricane deductible — often a separate, higher deductible expressed as a percentage of Coverage A (1% to 5%) rather than a flat dollar amount. On a $400,000 home, a 2% wind deductible means $8,000 out of pocket before insurance pays anything on a wind claim.
• Hail deductible — some policies in hail-prone regions have a separate hail deductible

Check the endorsements

Endorsements are additions or modifications to your policy. They can expand coverage, restrict it, or add entirely new protections. They are typically listed on the declarations page and detailed in separate documents attached to the policy.

The endorsements that matter most for new homeowners:

Ordinance and Law

Pays for the cost of bringing your home up to current building codes after a covered loss. When older homes are damaged and need repair or rebuilding, local codes often require upgrades — updated electrical, plumbing, structural reinforcements — that go beyond simply restoring what was there.

Most policies default to 10% of Coverage A for Ordinance and Law coverage. On a $400,000 home that is $40,000 — which in many markets does not cover the actual cost of required code upgrades during a rebuild.

Ask your agent: What is my Ordinance and Law limit and is it adequate for the age and construction of this home?

Extended or guaranteed replacement cost

Provides a cushion above your Coverage A limit if construction costs exceed your insured value at the time of a loss. Construction costs fluctuate — what it cost to build two years ago is not what it costs today.

Extended replacement cost typically adds 20% to 50% above your Coverage A limit. Guaranteed replacement cost pays whatever it actually costs to rebuild, regardless of the Coverage A limit. If available, guaranteed replacement cost is the stronger protection.

Water backup coverage

Covers damage from sewer or drain backup — water that comes up through your drains rather than entering from a storm. This is one of the most common residential claims and is not covered by a standard homeowners policy without this endorsement.

Check the limit. Many policies offer water backup in amounts from $5,000 to $25,000. Given that a finished basement flood can easily exceed $30,000 in remediation and repair costs, a $5,000 sublimit is often inadequate.

Scheduled personal property

If you own high-value jewelry, art, collectibles, musical instruments, firearms, or electronics, check whether they are scheduled separately. Standard policies have per-item and per-category sublimits for these items — often $1,000 to $2,500 for jewelry — that may be far below their actual value.

Mold coverage

Most standard policies cap mold coverage at $5,000 to $10,000. Mold remediation after a significant water loss can cost far more. Review the limit and ask whether it can be increased.

Read the exclusions section

The exclusions section tells you what your policy will not cover. It is the most important part of the policy that almost no one reads.

Common exclusions to review:

Flood — Water that enters from outside the home due to storm surge, overflow, or surface flooding is excluded. This requires a separate flood insurance policy.

Earthquake — Requires a separate policy or endorsement.

Gradual damage and wear and tear — Insurance covers sudden and accidental losses. Damage that develops over time — a slow leak, deteriorating roofing, settling — is typically excluded as a maintenance issue.

Neglect — If you fail to take reasonable steps to protect the property after a loss and further damage results, that additional damage may not be covered.

Animal damage — Many carriers are adding animal exclusions to policies at renewal. Review your policy for any exclusions related to pets, wildlife, or vermin.

Intentional acts — Damage you cause on purpose is not covered.

Read through the exclusions carefully. If something surprises you, ask your agent to explain it before you close.

Verify the mortgage clause

Your lender will require that they are listed as a loss payee or additional insured on your policy — sometimes called the mortgagee clause. This ensures that in the event of a major loss, the insurance payment is issued jointly to you and your lender.

Confirm your lender is listed correctly — with the correct legal name and loan number. Errors here can delay claims payments significantly.

Questions to ask your agent before closing

If you have time to speak with your agent before closing, these are the questions worth asking:

• What replacement cost estimate was used to set my Coverage A limit, and how was it calculated?
• What is my Ordinance and Law coverage limit? Is it adequate for the age of this home?
• Does this policy pay replacement cost or actual cash value for personal property?
• Is water backup coverage included, and what is the limit?
• Are there any wind, hurricane, or hail deductibles separate from my standard deductible?
• Are there any endorsements I should consider for this specific property?
• What is excluded that might surprise me if I had a claim?

A good agent will answer these questions clearly. If the answers are vague or the agent seems reluctant to discuss coverage details, that is worth noting.

What to do if you find a problem before closing

If you review your policy and find a coverage gap — a low Coverage A limit, missing endorsements, a wind exclusion you were not expecting — you have options.

Ask your current carrier to adjust the policy. Many coverage issues can be corrected with a phone call. Increasing Coverage A, adding a water backup endorsement, or upgrading to replacement cost personal property coverage are routine changes.

Shop for a different policy. If the coverage issues are significant or the carrier is unwilling to make changes, you have time before closing to obtain quotes from other carriers. The same property can be insured very differently by different carriers.

Negotiate a closing delay if necessary. If you discover a significant insurance issue very close to closing, it is reasonable to ask for a short extension to resolve it. A good real estate attorney or agent can help facilitate this.

After closing: set a reminder to review at renewal

Your first policy renewal is the most important one. Carriers sometimes adjust terms, limits, and exclusions at renewal — often in ways that are not prominently disclosed.

Set a calendar reminder 60 days before your renewal date to review your policy again using the same checklist. Confirm your Coverage A limit still reflects current construction costs. Review any changes to your endorsements. And if you have made improvements to the home, update your coverage accordingly.

The bottom line

Reviewing your homeowners insurance policy before closing is not complicated — but it does require actually reading it. The declarations page, the endorsements, and the exclusions tell you everything you need to know about what you are buying and where the gaps are.

The time to find a coverage gap is before you close, not after a loss.

Jennifer Taylor is a licensed public adjuster in Georgia and South Carolina and the founder of Claim Ready. She has worked over $2.5 million in active and approved property claims. Claim Ready helps homeowners understand their insurance coverage before a loss occurs.